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Arbitration's Suspect Status

Concerned about abuses of power in the arbitration area, state legislatures have stepped up efforts to regulate arbitration agreements. But under the U.S. Supreme Court’s Federal Arbitration Act ("FAA") jurisprudence, such measures are uniformly preempted, resulting in what one scholar has described as "federal imperialism" in an area of law traditionally reserved for the states. This has led to numerous calls for reform, including the controversial "Arbitration Fairness Act" currently pending in Congress.

Under the Constitution’s Supremacy Clause, the FAA should preempt only state laws that stand as an "obstacle" to its purpose. The traditional understanding of that purpose is to enforce arbitration agreements as written. In this Article, I offer a different interpretation of that purpose as one of anti-discrimination: of reversing centuries of "judicial hostility," pursuant to which courts refused to honor pre-dispute arbitration agreements in quite the same way they did other contracts. If I am correct, the FAA should preempt only those state laws that can be said to discriminate improperly against arbitration. Many courts, scholars, and practitioners have lent credence to this theory, but this is the first article systematically to develop it.

This is the first of two works in which I use anti-discrimination law and theory as a lens to critique the Court’s FAA preemption jurisprudence and to develop a more sophisticated approach - one that is better at reconciling the states’ regulatory interests with the "national policy favoring arbitration."